Supporting Individuals with Mental Illness

June 5, 2019

national alliance on mental illness grass valleyRecently I shared information about “Special Needs Trusts and ABLE accounts” with NAMI of Nevada County. I honor this organization which supports, educates and advocates for families of loved ones with a mental illness. NAMI hosts both a monthly family support group, and an education program (where I was the presenter).

A Special Needs Trust (SNT) is designed to plan for future care needs of a person with a disability. Funds in a SNT do not count as a resource, allowing the disabled individual to qualify for needs-based public benefits. The disability may be the result of an injury or illness, starting at birth or happening later in life. A person with mental illness who is unable to work also may qualify for disability benefits such as Social Security, Medi-Cal and other public benefits programs.

The SNT terms must be carefully drafted, particularly if the funds belong to the disabled individual. Someone who receives an inheritance or court settlement may be required to use up this entire windfall to continue eligibility for SSI.  However,  the law allows these funds to be held in a “first-party” SNT to pay for supplemental future needs which are not covered by public benefits.

special needs estate planning grass valleyMore commonly, families may wish to set aside funds in a “third-party” SNT for the future needs of a loved one. This type of SNT can be prepared with more flexibility.

For more information about Special Needs Trusts, click here.

Beginning in 2014, the Achieving a Better Life Experience (ABLE) Act provided a simpler alternative in certain situations. Families may now fund an ABLE account for individuals who became disabled before the age of 26, to save and invest in a tax-advantaged account without jeopardizing their ability to collect SSI. The account may be used to pay “qualified disability expenses.” These include health care, education, housing, transportation, employment training, assistive technology, personal support services, financial management and legal expenses.

California’s ABLE program started in 2018, for opening an online account. Other states also have ABLE programs, so it is useful to compare fees, investment options, etc.

An ABLE account may be a good fit to encourage a loved with mental illness to achieve greater financial independence during periods of wellness, while providing security and oversight when needed.

For more information about ABLE accounts, click here.

Please consider supporting NAMI and attending their upcoming education programs- I will meet you there!

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